published its draft findings<\/strong><\/a> in April 2019 after a period of public consultations and engagement with stakeholders.<\/p>\nIt found that there is ineffective competition in many subscription TV market segments and that MultiChoice possessed significant market power in these markets.<\/p>\n
ICASA acknowledged that OTT services like Netflix are expanding in terms of the number of new entrants and the scale of operations, particularly international video-on-demand service providers.<\/p>\n
However, it was found that the impact of OTTs in South Africa is muted given the limited access to broadband access, the perceived high cost of data, and low Internet speeds.<\/p>\n
To address the lack of competition in the South African pay-TV market, ICASA said it may impose pro-competition licensing conditions on MultiChoice.<\/p>\n
Potential remedies include shortening exclusive contracts, imposing rights splitting and wholesale-must-offer, opening MultiChoice\u2019s network, and introducing set-top box inter-operability.<\/p>\n
Many stakeholders, including Telkom, Cell C, Econet Media, and the Competition Commission, supported these pro-competition measures.<\/p>\n
MultiChoice hits back<\/h3>\n
MultiChoice slated ICASA\u2019s findings, saying the subscription TV market is much broader than what is defined in the draft findings and that it is, in fact, fiercely competitive.<\/p>\n
The company said OTT operators like Netflix and YouTube are their biggest competitors and a real threat.<\/p>\n
\u201cCurrently competition is fierce and will continue to grow rapidly and in a disruptive way,\u201d MultiChoice said.<\/p>\n
\u201cWe consider providers like Netflix, YouTube, Disney+, HBO Now & Peacock to be an existential competitive threat.\u201d<\/p>\n
Commenting on ICASA\u2019s draft findings, MultiChoice said the assertion that good quality broadband access is limited and expensive in South Africa is not true.<\/p>\n
It argued that broadband access is already sufficiently widespread for DStv viewers to switch to OTT on a massive scale.<\/p>\n
It backed up its claim by highlighting that three-quarters of DStv subscribers already watch TV on other devices, which means they have sufficient broadband for streaming.<\/p>\n
In its findings document, the regulator found a high incidence of linear television viewing amongst South Africans. This is a market where DStv dominates.<\/p>\n
MultiChoice argued that streaming services like Netflix Direct, YouTube, Showmax, and Startimes ON already offer linear content.<\/p>\n
It added that non-linear viewing offers a competing option to any linear time-slot – with massively greater options – and is therefore a particularly powerful constraint.<\/p>\n
Instead of focussing mainly on local TV subscription services like DStv to assess competition, MultiChoice said ICASA should include all OTT providers which are growing increasingly powerful.<\/p>\n
\u201cOTT entrants follow a powerful and competitive business model that is reshaping the competitive landscape,\u201d MultiChoice said.<\/p>\n
MultiChoice said it is directly affected by growing competition from Netflix, YouTube, and other streaming services.<\/p>\n
This is seen in the sharp decline in premium subscriptions. \u201cThe four largest DStv bouquets across all levels have seen significant falls in real prices in the last three years,\u201d MultiChoice said.<\/p>\n
The drive its point home, MultiChoice said the regulator is ignoring the harm that can be caused by its proposed pro-competition measures.<\/p>\n
\u201cStrangling MultiChoice does not guarantee access to rights and will impact other licensees, jeopardise jobs, erode the tax base, and cause harm with no benefits to the country,\u201d it said.<\/p>\n
\nMultichoice Presentation Draft Findings Document On The Inquiry Into Subscription Television Broadcasting Services<\/h3>\n